CME Exec: Bitcoin ETFs Signal Digital Asset Maturity…

CME Group’s executive director and digitization lead has called the increasing number of planned bitcoin exchange-traded funds (ETFs) a sign that the market for blockchain-based digital assets is maturing.

At the Tech Talk 5.0 conference in London this week, CME’s Sandra Ro spoke broadly about the progress being made by the derivatives marketplace provider in exploring the blockchain industry, reviewing the company’s new bitcoin benchmark and speaking in-depth how the group looks at the future of blockchain more broadly.

In response to audience questions, Ro notably said she believes the two ETF filings currently pending in the US are a sign more filings for regulated products may be on the way. Further, she said existing products and filings prove that there is enough demand for additional regulated products in the digital assets space.

Ro told the audience:

“In fact, some of the most exciting areas to explore are at the intersection of digital assets and tokenized fiat and tokenized commodities.”

Elsewhere, Ro voiced an argument as to why her firm believes the public blockchain space could be as valuable for financial institutions to understand as private alternatives, stating that CME maintains a dual focus on digital assets and blockchain and distributed ledger technology.

Even though Ro sees bitcoin as the most mature digital asset, she is quick to note that there are many others that may or may not succeed, even referencing how the social network-based digital currency Steemit has risen sharply in total market capitalization in recent days.

An audience poll at the event suggested that those in attendance are perhaps now more familiar with bitcoin, as well. When asked if attendees had ever held any bitcoin, 23% of the audience voted ‘Yes’, while 77% reported ‘No’.

A total of 79 votes were cast.

PoC strategy

Overall, Ro discussed four primary mandates that CME has put in place for its digitization group.

Firstly, she said, the group is looking at projects as part of a long-term strategy, on a timescale of three to five years. Previous work by the group was more short-term focused, but going forward, the group is looking into ideas that take time to mature.

“We want to make smart bets on where we need to be in the next three-to-five years,” Ro said.

Ro spoke to a focus on both projects and proofs-of-concept, distinguishing between the two categories in terms of time and money invested.

CME undertakes a project, she said, when the idea is more concrete and the company is willing to spend up to a few million dollars getting the concept to fruition.

On the other hand, proofs-of-concept are worked on with little funding and a lesser time commitment, while experiencing a higher failure rate, she said.

Ro stressed that the company’s motto with proofs-of-concept is to experiment and fail fast.

FinTech engagement

Later, Ro discussed how CME is working with both new and established players to chart its future course for FinTech.

For example, she said CME is looking into possible changes to how intellectual property should be handled by the group so it can better work with new players.

Ro believes that the traditional approach of patenting technologies developed by CME may not work well with the evolving FinTech community.

In terms of external engagement on blockchain specifically, Ro mentioned the group’s involvement with the Linux Foundation-led Hyperledger project, and other consortiums like Post-Trade Distributed Ledger Group (PTDL).

Disclosure: CME Group is an investor in Digital Currency Group, of which CoinDesk is a subsidiary.